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 Apple Reports Third Quarter Results
   Tuesday, August 01, 2017 4:30:05 PM ET

--Services Revenue Hits All-Time Quarterly Record

Apple(R) today announced financial results for its fiscal 2017 third quarter ended July 1, 2017. The Company posted quarterly revenue of $45.4 billion and quarterly earnings per diluted share of $1.67. These results compare to revenue of $42.4 billion and earnings per diluted share of $1.42 in the year-ago quarter. International sales accounted for 61 percent of the quarter’s revenue.

"With revenue up 7 percent year-over-year, we’re happy to report our third consecutive quarter of accelerating growth and an all-time quarterly record for Services revenue," said Tim Cook, Apple’s CEO. "We hosted an incredibly successful Worldwide Developers Conference in June, and we’re very excited about the advances in iOS, macOS, watchOS and tvOS coming this fall."

"We reported unit and revenue growth in all our product categories in the June quarter, driving 17 percent growth in earnings per share," said Luca Maestri, Apple’s CFO. "We also returned $11.7 billion to investors during the quarter, bringing cumulative capital returns under our program to almost $223 billion."

Apple is providing the following guidance for its fiscal 2017 fourth quarter:

? revenue between $49 billion and $52 billion ? gross margin between 37.5 percent and 38 percent ? operating expenses between $6.7 billion and $6.8 billion ? other income/(expense) of $500 million ? tax rate of 25.5 percent

Apple’s board of directors has declared a cash dividend of $0.63 per share of the Company’s common stock. The dividend is payable on August 17, 2017 to shareholders of record as of the close of business on August 14, 2017.

Apple will provide live streaming of its Q3 2017 financial results conference call beginning at 2:00 p.m. PDT on August 1, 2017 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), tax rate, and plans for return of capital. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 24, 2016, its Form 10-Q for the fiscal quarter ended December 31, 2016, its Form 10-Q for the fiscal quarter ended April 1, 2017, and its Form 10-Q for the quarter ended July 1, 2017 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms -- iOS, macOS, watchOS and tvOS -- provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay and iCloud. Apple’s more than 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.

NOTE TO EDITORS: For additional information visit Apple Newsroom (www.apple.com/newsroom), or call Apple’s Media Helpline at (408) 974-2042.

(C) 2017 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple. Other company and product names may be trademarks of their respective owners.

 
                                                                                                                             Apple Inc.
                                                                                                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                                                                                                    (In millions, except number of shares which are reflected in
                                                                                                                  thousands and per share amounts)
                                                                                                                                       
                                                                                                    Three Months Ended                                                                                           Nine Months Ended
                                                                  ---------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------
                                                                               July 1,                           June 25,                                                July 1,                           June 25,
                                                                                2017                                                  2016                                                   2017                                                  2016
                                                                  ------------------------------                        ------------------------------                        -------------------------------                        ------------------------------
Net sales                                                            $ 45,408                                              $ 42,358                                              $ 176,655                                                    $              168,787
Cost of sales (1)                                                      27,920                             26,252                             108,400                                                102,337
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
    Gross margin                                                       17,488                             16,106                              68,255                                                 66,450
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
                                                                                                                                                                                                                                      
Operating expenses:
    Research and development (1)                                        2,937                                                 2,560                                                  8,584                                                                     7,475
    Selling, general and administrative (1)                             3,783                              3,441                              11,447                                                 10,712
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
        Total operating expenses                                        6,720                              6,001                              20,031                                                 18,187
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
                                                                                                                                                                                                                                      
Operating income                                                       10,768                                                10,105                                                 48,224                                                                    48,263
Other income/(expense), net                                               540                                364                               1,948                                                    921
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
Income before provision for income taxes                               11,308                                                10,469                                                 50,172                                                                    49,184
Provision for income taxes                                              2,591                              2,673                              12,535                                                 12,511
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
Net income                                                           $  8,717                           $  7,796                           $  37,637                                 $               36,673
                                                                  ==== ====== ====================                      ==== ====== ====================                      ==== ======= ====================                      ========== ====================
                                                                                                                                                                                                                                      
Earnings per share:
    Basic                                                            $   1.68                                              $   1.43                                              $    7.18                                                    $                 6.66
    Diluted                                                          $   1.67                                              $   1.42                                              $    7.14                                                    $                 6.62
                                                                                                                                                                                                                                      
Shares used in computing earnings per share:
    Basic                                                           5,195,088                                             5,443,058                                              5,239,847                                                                 5,505,456
    Diluted                                                         5,233,499                                             5,472,781                                              5,274,394                                                                 5,535,931
                                                                                                                                                                                                                                      
Cash dividends declared per share                                    $   0.63                                              $   0.57                                              $    1.77                                                    $                 1.61
                                                                                                                                                                                                                                      
(1) Includes share-based compensation expense as follows:
    Cost of sales                                                    $    216                                              $    188                                              $     662                                                    $                  583
    Research and development                                         $    566                                              $    479                                              $   1,730                                                    $                1,413
    Selling, general and administrative                              $    411                                              $    387                                              $   1,274                                                    $                1,184
                                                                                                                                                                                                                                                 
                                                                                          Apple Inc.
                                                                       CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
                                                                 (In millions, except number of shares which are reflected in
                                                                                   thousands and par value)
                                                                                                                        
                                                                                                                   July 1,                                               September 24,
                                                                                                                    2017                                                     2016
                                                                                                   ------------------------------------                        ------------------------------
                                                                                            ASSETS:
Current assets:
    Cash and cash equivalents                                                                             $   18,571                                                    $               20,484
    Short-term marketable securities                                                                          58,188                                                                    46,671
    Accounts receivable, less allowances of $55 and $53, respectively                                         12,399                                                                    15,754
    Inventories                                                                                                3,146                                                                     2,132
    Vendor non-trade receivables                                                                              10,233                                                                    13,545
    Other current assets                                                                                      10,338                                                  8,283
                                                                                                   --------------------------------------                      --------------------------------
        Total current assets                                                                                 112,875                                                                   106,869
                                                                                                                                                                
Long-term marketable securities                                                                              184,757                                                                   170,430
Property, plant and equipment, net                                                                            29,286                                                                    27,010
Goodwill                                                                                                       5,661                                                                     5,414
Acquired intangible assets, net                                                                                2,444                                                                     3,206
Other non-current assets                                                                                      10,150                                                  8,757
                                                                                                   --------------------------------------                      --------------------------------
        Total assets                                                                                      $  345,173                                 $              321,686
                                                                                                   ======== ======== ====================                      ========== ====================
                                                                                                                                                                
                                                               LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
    Accounts payable                                                                                      $   31,915                                                    $               37,294
    Accrued expenses                                                                                          23,304                                                                    22,027
    Deferred revenue                                                                                           7,608                                                                     8,080
    Commercial paper                                                                                          11,980                                                                     8,105
    Current portion of long-term debt                                                                          6,495                                                  3,500
                                                                                                   --------------------------------------                      --------------------------------
        Total current liabilities                                                                             81,302                                                                    79,006
                                                                                                                                                                
Deferred revenue, non-current                                                                                  2,984                                                                     2,930
Long-term debt                                                                                                89,864                                                                    75,427
Other non-current liabilities                                                                                 38,598                                                 36,074
                                                                                                   --------------------------------------                      --------------------------------
        Total liabilities                                                                                    212,748                                                193,437
                                                                                                   --------------------------------------                      --------------------------------
                                                                                                                                                                
Commitments and contingencies
                                                                                                                                                                
Shareholders’ equity:
    Common stock and additional paid-in capital, $0.00001 par value:                                          34,445                                                                    31,251
    12,600,000 shares authorized; 5,169,782 and 5,336,166 shares issued
    and outstanding, respectively
    Retained earnings                                                                                         98,525                                                                    96,364
    Accumulated other comprehensive income/(loss)                                                               (545 )                                                                     634
                                                                                                   --------------------------------------                      --------------------------------
        Total shareholders’ equity                                                132,425                                                128,249
                                                                                                   --------------------------------------                      --------------------------------
        Total liabilities and shareholders’ equity                             $  345,173                                 $              321,686
                                                                                                   ======== ======== ====================                      ========== ====================
                                                                                                                                                                           
                                                                                      Apple Inc.
                                                              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                                                                     (In millions)
                                                                       
                                                                                                                                Nine Months Ended
                                                                                           -------------------------------------------------------------------------------------------
                                                                                                         July 1,                             June 25,
                                                                                                          2017                                                    2016
                                                                                           --------------------------------                        --------------------------------
Cash and cash equivalents, beginning of the period                                              $ 20,484                             $ 21,120  
                                                                                           ------ ------ --------------------                      ------ ------ --------------------
Operating activities:
  Net income                                                                                      37,637                                                  36,673
  Adjustments to reconcile net income to cash generated by operating
  activities:
     Depreciation and amortization                                                                 7,673                                                   7,957
     Share-based compensation expense                                                              3,666                                                   3,180
     Deferred income tax expense                                                                   4,764                                                   5,191
     Other                                                                                          (142 )                                                   419
  Changes in operating assets and liabilities:
     Accounts receivable, net                                                                      3,381                                                   4,623
     Inventories                                                                                  (1,014 )                                                   518
     Vendor non-trade receivables                                                                  3,312                                                   6,166
     Other current and non-current assets                                                         (3,229 )                                                 1,049
     Accounts payable                                                                             (5,212 )                                                (9,567 )
     Deferred revenue                                                                               (418 )                                                (1,148 )
     Other current and non-current liabilities                                                    (2,476 )                                                (5,363 )
                                                                                           ----------------------------------                      ----------------------------------
        Cash generated by operating activities                                                    47,942                               49,698  
                                                                                           ----------------------------------                      ----------------------------------
Investing activities:
  Purchases of marketable securities                                                            (123,781 )                                              (112,068 )
  Proceeds from maturities of marketable securities                                               19,347                                                  14,915
  Proceeds from sales of marketable securities                                                    76,747                                                  69,926
  Payments made in connection with business acquisitions, net                                       (248 )                                                  (146 )
  Payments for acquisition of property, plant and equipment                                       (8,586 )                                                (8,757 )
  Payments for acquisition of intangible assets                                                     (209 )                                                  (753 )
  Payments for strategic investments, net                                                            (87 )                                                (1,376 )
  Other                                                                                              313                                 (321 )
                                                                                           ----------------------------------                      ----------------------------------
        Cash used in investing activities                                                        (36,504 )                                               (38,580 )
                                                                                           ----------------------------------                      ----------------------------------
Financing activities:
  Proceeds from issuance of common stock                                                             274                                                     247
  Excess tax benefits from equity awards                                                             534                                                     391
  Payments for taxes related to net share settlement of equity awards                             (1,646 )                                                (1,361 )
  Payments for dividends and dividend equivalents                                                 (9,499 )                                                (9,058 )
  Repurchases of common stock                                                                    (25,105 )                                               (23,696 )
  Proceeds from issuance of term debt, net                                                        21,725                                                  17,984
  Repayments of term debt                                                                         (3,500 )                                                (2,500 )
  Change in commercial paper, net                                                                  3,866                                3,992  
                                                                                           ----------------------------------                      ----------------------------------
        Cash used in financing activities                                                        (13,351 )                                               (14,001 )
                                                                                           ----------------------------------                      ----------------------------------
Increase/(Decrease) in cash and cash equivalents                                                  (1,913 )                                                (2,883 )
                                                                                           ----------------------------------                      ----------------------------------
Cash and cash equivalents, end of the period                                                    $ 18,571                             $ 18,237  
                                                                                           ====== ====== ====================                      ====== ====== ====================
Supplemental cash flow disclosure:
  Cash paid for income taxes, net                                                               $  9,752                                                $  8,990
  Cash paid for interest                                                                        $  1,456                                                $    892
                                                                                                                                                                  
                                                                                                                                                                                  Apple Inc.
                                                                                                                                                                        Q3 2017 Unaudited Summary Data
                                                                                                                                                                   (Units in thousands, Revenue in millions)
                                                                                                                                       
                                                                     
                                                                -------------------- -------------------- --------------------
                                                                                            Q3 2017                                                                Q2 2017                                                  Q3 2016                                            Sequential Change                                              Year/Year Change
                                                                ---------------------------------------------------------------                     ------------------------------------                     ------------------------------------                     -----------------------------------                     ------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                          
Operating Segments                                                                                               Revenue                                                         Revenue                                                  Revenue                                                 Revenue                                                       Revenue
                                                                                                          --------------------                                                  -------                                                  -------                                                 -------                                                 --------------------
                     Americas                                                                                          $20,376                                                  $21,157                                                  $17,963                                                    - 4%                                                                  13%
                     Europe                                                                                             10,675                                                   12,733                                                    9,643                                                   - 16%                                                                  11%
                     Greater China                                                                                       8,004                                                   10,726                                                    8,848                                                   - 25%                                                                - 10%
                     Japan                                                                                               3,624                                                    4,485                                                    3,529                                                   - 19%                                                                   3%
                     Rest of Asia Pacific                                                                                2,729                                                    3,795                                                    2,375                                                   - 28%                                                                  15%
                                                                                                          --------------------                                                  -------                                                  -------                                                 -------                                                 --------------------
Total Apple                                                                      $45,408                                                  $52,896                                                  $42,358                                                   - 14%                                                                   7%
                                                                -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                          
                                                                     
                                                                -------------------- -------------------- --------------------
                                                                                            Q3 2017                                                                Q2 2017                                                  Q3 2016                                            Sequential Change                                              Year/Year Change
                                                                ---------------------------------------------------------------                     ------------------------------------                     ------------------------------------                     -----------------------------------                     ------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                          
Product Summary                                                         Units                                    Revenue                             Units                       Revenue                      Units                       Revenue                      Units                      Revenue                      Units                            Revenue
                                                                --------------------                      --------------------                      ------                      -------                      ------                      -------                      -----                      -------                      -----                      --------------------
                     iPhone (1)                                               41,026                                   $24,846                      50,763                      $33,249                      40,399                      $24,048                      - 19%                        - 25%                         2%                                        3%
                     iPad (1)                                                 11,424                                     4,969                       8,922                        3,889                       9,950                        4,876                        28%                          28%                        15%                                        2%
                     Mac (1)                                                   4,292                                     5,592                       4,199                        5,844                       4,252                        5,239                         2%                         - 4%                         1%                                        7%
                     Services (2)                                                                                        7,266                                                    7,041                                                    5,976                                                      3%                                                                  22%
                     Other Products (1)(3)                                                                               2,735                                                    2,873                                                    2,219                                                    - 5%                                                                  23%
                                                                                                          --------------------                                                  -------                                                  -------                                                 -------                                                 --------------------
Total Apple                                                                      $45,408                                                  $52,896                                                  $42,358                                                   - 14%                                                                   7%
                                                                -------------------- -------------------- --------------------
 (1)  Includes deferrals and amortization of related software upgrade
                         rights and non-software services.
 (2)                     Includes revenue from Digital Content and Services, AppleCare,
                         Apple Pay, licensing and other services.
 (3)                     Includes sales of Apple TV, Apple Watch, Beats products, iPod and
                         Apple-branded and third-party accessories.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170801006607r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170801006607/en/

SOURCE: Apple Inc.

Apple 
Press: 
Kristin Huguet, 408-974-2414 
khuguet@apple.com 
or 
Investor Relations: 
Nancy Paxton, 408-974-5420 
paxton1@apple.com 
Joan Hoover, 408-974-4570 
hoover1@apple.com


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